Both the foreign direct investment (FDI) and international trade are considered to be the engine of the world economy growth. Recently, the international capital became more and more active, and direct investment turned to be one of the main ways of capital flowing, as well as the very important channels of getting resource outside for developing countries. Since 2002, China has been the No. 1 of absorption the FDI in the world and the truth has proved that FDI played a more and more significant role in our country's economical developing. Focusing on the relationship between FDI and economy growth, more studies has been concerned to the macro-system and less to micro-system.Our study turned the perspective into the province level and based on the practice of absorption and using of FDI, analyzed the effect of FDI to economy growth. Then with the tools of metering, we tested the relationship between FDI and economy growth of Hunan Province from different perspectives. The empirical studies showed that through causing capital effect, employment effect, industrial effect and foreign trade effect, FDI influenced the economical development. We tested that based on general regression analysis FDI caused 3.11% inputs-outputs rate to economy growth, based on Granger Causing Test FDI and GDP made the other grow mutually at the first lagging period, and based on ECM FDI caused 4.2% contribution rate. Finally, with the IRF and VD analysis we found that in a long time period, there was a balanced and positive relationship between FDI and economy growth of Hunan Province, but the GDP made notably more contribution to the increasing of FDI.At last, we concluded that both of FDI and GDP were mutually growing and developing. So presently, FDI was still the essential decision of developing export-oriented economy for Hunan Province. |